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INDIANAPOLIS--([ BUSINESS WIRE ])--Indiana Business Bancorp (OTCBB: IBBI), the holding company for Indiana Business Bank, announced results for the three months ended March 31, 2012.

"We are pleased with our 2011 performance and the continuation of positive trends as we move through 2012. Problem asset management, an expanding net interest margin and continued cost controls contributed to a strong first quarter. The economy remains uncertain, but much progress has been made managing our problem assets."

The company recorded a profit of $221,617, or $.15 per share for the quarter. This compares to a profit of $99,127, or $.07 per share for the first quarter of 2011. The 2012 results include recognition of a $50,000 tax benefit from the carry over of net operating losses. Net income for the first quarter of 2011 does not reflect a similar credit because the period ended December 31, 2011 was the first reporting period in which the company satisfied accounting rules for tax benefit recognition. Pre-tax profits of $171,617 for the quarter represented a 73% increase over profits for the first quarter of 2011. The increase in profitability resulted from increased net interest income and lower loan provision expense.

Net interest income for the first quarter of 2012 increased by 6.7% compared with the first quarter of 2011. An improvement in net interest margin, from 3.63% during first quarter 2011 to 4.53% during the same period of 2012, allowed the company to overcome a reduction in earning assets during the year.

Non-interest income of $133,187 for the period ended March 31, 2012 compares to non-interest income of $196,114 for the period ended March 31, 2011. The 2011 period included a gain on sale of two large Small Business Administration guaranteed loans.

Non-interest expense (generally salaries and other operating expenses) increased less than 2% from $598,565 for the first quarter of 2011 to $609,491 for the same period of 2012. The increase resulted from additional salary and benefit expense.

The provision for loan losses declined from $190,000 in the first quarter of 2011 to $90,000 in the first quarter of 2012. This is the result of an improving credit environment and a smaller loan portfolio. The allowance for loan losses was $1,457,345 at March 31, 2012, which represents 2.68% of total loans.

Non-performing assets (consisting of non-accrual loans, loans past due over 90 days and other real estate owned) dropped by 44%, from $5,254,415 at March 31, 2011, to $2,949,652 at March 31, 2012. This improvement is the result of a combination of improved borrower performance, payoffs, and liquidation of collateral.

The bankas Tier 1 Leverage Ratio of 13.8% and Total Risk Based Capital Ratio of 17.99% exceeded the levels needed to be considered awell capitalizeda at March 31, 2012.

President and CEO James S. Young stated, aWe are pleased with our 2011 performance and the continuation of positive trends as we move through 2012. Problem asset management, an expanding net interest margin and continued cost controls contributed to a strong first quarter. The economy remains uncertain, but much progress has been made managing our problem assets.a Young added, aWe will continue work to further improve our net interest margin, generate non-interest income and manage problem assets to the best possible outcome.a

About Indiana Business Bancorp and Indiana Business Bank

Indiana Business Bancorp is a bank holding company whose operations are conducted through its subsidiary, Indiana Business Bank, a state-chartered, locally-owned and managed commercial bank formed for the purpose of providing highly-personalized banking services for small to medium-sized businesses, their owners and professional services firms in the Indianapolis, Indiana metropolitan area. The bank provides a full line of commercial banking loan, deposit, and cash management services that are delivered in a highly personalized manner by experienced banking professionals. The bank specializes in serving the commercial and consumer banking needs of small to medium sized businesses and their owners, and professionals located primarily throughout Central Indiana.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Indiana Business Bank and Indiana Business Bancorpas business which are not historical facts are "forward-looking statements" that involve risks and uncertainties which may cause actual results to differ materially from expected results, including: changes in general, regional and local economic conditions, and their effect on interest rates; the impact of the downturn in housing and the adverse conditions in the credit markets; competition among banks and other financial intermediaries within the Indianapolis metropolitan market; risks that borrowers may default on their loans; and changes in regulations and accounting policies affecting financial institutions.

UNAUDITED